Which of the following are options available to finance risks?

The correct choice emphasizes the various strategies available for financing risks, particularly focusing on methods that involve a more proactive or self-directed approach to risk management.

Self-insurance allows an organization to set aside funds to cover potential losses instead of relying on external insurance. This approach provides flexibility and can be particularly useful for managing risks that an organization is willing or able to absorb internally, surely leading to potential cost savings over time.

A captive insurance company is another effective way to finance risks. By establishing a captive, a company can underwrite its own risks and potentially retain profits that would otherwise go to external insurers. This activity can create a more stable approach to risk management while also allowing for tailored coverage that fits the specific needs of the parent company.

Additionally, borrowing is a viable option to finance larger risks. This means that when faced with significant potential losses, a company can access funds through loans or other financial instruments to cover these losses or invest in risk mitigation strategies, ensuring they have the necessary liquidity during adverse events.

Other options provided in the other choices involve methods that may not be directly related to financing risks in the same way. For instance, while reserves and hedging (mentioned in another choice) are essential risk management tactics, they serve more to mitigate the